Governor vetoes $138 million; longevity bonus program discontinued

Murkowski slashes state budget

JUNEAU Gov. Frank Murkowski, wielding his veto pen, slashed millions from next year's state budget and set adrift a popular program that paid monthly bonuses to some seniors.

In signing into law a vastly stripped down fiscal 2004 budget, Murkowski said he's taken the first step in putting the state on sound financial footing.

Alaska, once flush with oil money that fed state coffers, can no longer afford the government it has, the administration said.

Murkowski vetoed $138 million from the budget, ending the state's longevity bonus program for seniors and dramatically cutting state support to local governments. His budget will eliminate 209 state positions, about 1.1 percent of the state's employment rolls.

''This is the first major step in disciplining Alaska to live within our means,'' said the Republican governor. Murkowski, who took office in December, has already pledged to cut $250 million from the next budget.

His largest single veto was the $44 million cut to end the Senior Citizen Longevity Bonus Program, which paid bonuses of up to $250 per month to about 18,000 eligible seniors.

The program was created in 1972 to reward seniors who were in Alaska prior to statehood. Murkowski has complained that the program, expanded in 1984 after a state Supreme Court ruling, is unfair to the 26,000 seniors who don't get it.

''This program does not achieve, in my opinion, its original purpose of rewarding our pre-statehood pioneers and is certainly not fair to all senior citizens,'' Murkowski said.

''I don't think he made a peep about doing this for seniors when he ran for office,'' said Senate Minority Leader Johnny Ellis, D-Anchorage.

Seniors who successfully lobbied heavily against Murkowski's proposal to end the program before the Legislature, were also angry. Lawmakers agreed to begin phase out the program in 1996 and this breaks a promise with seniors who depend on the checks to survive, said Bob Hufman, of the Pioneers of Alaska.

''It was designed to die a natural death ... as old timers passed away it went down every year,'' said Hufman, 76. ''Evidently, we weren't passing away fast enough.''

Final longevity bonus checks will be paid in August. Murkowski plans to set aside $10 million in federal funds a share of the money Alaska receives from President Bush's tax cut plan to help needy seniors.

Under the proposal, needy seniors who qualify would get $120 per month in assistance, the maximum that can be paid to them under the state's General relief Assistance Program. Eligible seniors would get the assistance from September 2003 to June 2004.

Earlier this week, the governor had announced steep cuts in state assistance to local governments. He cut $37 million in assistance to local governments but offset it with $15 million from the federal tax cut funds.

Murkowski said local governments will feel the belt-tightening, but are better able to weather the budget cuts.

''The communities have many more avenues available to them to make up the shortfall,'' Murkowski said.

Like so many other things in Alaska, oil is at the root of the governor's action on Thursday. Revenues from oil production account for about 80 percent of the state's revenues and have been on the decline.

Alaska has relied on its $1.9 billion Constitutional Budget Reserve to balance state spending in nearly every year since it was created in 1990.

Murkowski intends to preserve the reserve account for at least five years to give his resource development proposals time to begin paying dividends to the state. This year, he expects to draw $379 million from that account.

Without budget cuts or new revenues for the state, budget analysts expect the reserve fund to be drained in three years.

Murkowski's $5.9 billion budget, which takes effect July 1, spends about $198 million less in state funds than this year's spending plan. It also included $27 million in cuts to the state's capital budget which pays for construction projects around the state and routinely includes projects pushed by individual lawmakers.

Murkowski, who said the Legislature's refusal to take up a 3 percent sales tax he backed among other revenue proposals, said those cuts were made fairly.